As a partner or shareholder, you’re subject to specific tax treatments on income, dividends, and sales of your interests. Proper understanding of these rules is crucial for tax efficiency and compliance.  In this overview, we will cover:

  • The dual role of tax payer and business influencer as a partner or shareholder
  • The importance of understanding the tax structure of partnerships and corporations
  • Preparing for tax liabilities and benefits

Becoming a Business Partner

  • Types of Partnerships and Taxation
    • General partnerships, limited partnerships, and LLCs as partnerships
  • Partner’s Distributive Share
    • Taxation of partnership income regardless of distribution
  • Contributions and Distributions
    • Tax consequences of contributing property to a partnership

Acquiring Corporate Shares

  • Taxation of Shareholders
    • Dividends and capital gains
  • Stock Sales and Basis Considerations
    • Determining basis in your stock for gain or loss calculations

Reporting Income and Losses

  • Schedule K-1 for Partnership Income
    • Reporting and paying tax on partnership income
  • Dividend Income and Reporting
    • Qualified vs. non-qualified dividends

Tax Benefits and Credits

  • Pass-Through Deduction for Qualified Business Income
    • Section 199A deduction specifics
  • Tax Credits Available to Partners and Shareholders
    • Applicable business tax credits

Special Situations

  • Changes in Partnership Interests
    • Sale or exchange of a partnership interest and its effects
  • Liquidation and Stock Redemptions
    • Tax implications of liquidating distributions and stock redemptions

Tax Planning Strategies

  • Timing of Income and Distributions
    • Considerations for tax planning around the distribution of profits
  • Reinvesting Dividends
    • Tax considerations and benefits

Retirement Planning for Partners and Shareholders

  • Retirement Plan Options for Business Owners
    • SEP IRA, SIMPLE IRA, and more

Final Thoughts

  • Yearly tax planning checklist for partners and shareholders
  • IRS forms and publications for reference
  • The value of a tax advisor in complex partnership and corporate tax situations


Detailed Bullet Points for the IRS Sections:

  • IRS References:
    1. Partnerships: IRS Form 1065, Schedule K-1 and IRS Publication 541
    2. Taxation of Dividends: IRS Topic No. 404
    3. Sale or Exchange of Partnership Interest: IRS Publication 541
    4. Section 199A Deduction: IRS Publication 535
    5. Business Tax Credits: Various IRS forms and publications depending on the specific credit (e.g., Form 3800, General Business Credit)